As Washington Gov. Gary Locke pointed out in his response to President Bush's State of the Union Address, states face their worst budget crises since World War II, requiring cuts in vital services. Yet, state governments will continue to fund critical technology programs this year despite facing billions of dollars in budget deficits, according to a report issued Wednesday by Input, a government IT market-research firm.

Input closely analyzed three states' IT spending plans: California, New Jersey, and Virginia. "Homeland security drives many of the most mission-critical projects that will be moving forward this year," says Meredith Luttner, Input's manager of state and local market development services.

With a budget deficit topping $34 billion, California is shifting responsibility for mental health, children, and family programs, including IT support, to the counties, saving the state $8 billion. Gov. Gray Davis plans to spread additional cuts over all state agencies rather than make drastic cuts in some areas. "The reality of the ultimate cuts makes it incumbent on the IT community to apply ourselves creatively to transform government operations," California CIO Clark Kelso says. "The role of IT in supporting cost-effective operations is more important now than ever. Selective IT projects can preserve operations while lowering costs."

Key short-term IT initiatives in California include an information security program for the Office of Statewide Health Planning and Development, implementation of a child-support enforcement system, and determining requirements for a new 911 system that employs new technologies.

New Jersey, facing a $5 billion budget gap, is cutting back on many programs, such as a 10% reduction in money allocated to state colleges and universities. Still, Gov. Jim McGreevey plans to invest in several top-priority IT projects involving homeland security and public health. McGreevey, according to the Input analysis, has committed $66 million to new security initiatives and to support the Office of Counter-Terrorism founded in January 2002. At least $25 million will be set aside to establish a more-effective emergency communications system across hospitals and other first responders. Additionally, $3.5 million is earmarked for a hospital bioterrorism-preparation program.

Virginia, challenged by a $1.5 billion budget shortfall, is simplifying IT oversight into a single state agency. Among state IT investments: an incident-management system to connect first responders to state agencies and a database of critical health information to facilitate effective care for residents in the aftermath of an attack.

"States cannot afford to put programs that are critical to constituent safety, such as public-safety communication systems and health networks, on hold," Luttner says. "States are compelled to solve fiscal problems without instituting cuts that threaten these important projects."